Virginia legislators rally to change state foreclosure process
The Courts of Justice Civil Laws subcommittee in the Virginia House of Representatives reviewed a bill Monday that would force banks to maintain up-to-date records tracking the ownership of mortgage loans.
Although the committee was scheduled to vote on the bill, the vote was pushed back to next Monday Jan. 24, according to a legislative aide in Republican Delegate Bob Marshall's office.
Marshall introduced the bill, formally called House Bill No. 1506, on Jan. 12.
Under the bill, lenders would have to provide written notification of a title sale at least 45 days before the transaction is made. In addition, the written notice must be provided to the owner of a property if a proposed foreclosure is taking place.
Marshall has previously taken issue with title transfers. In early November, he wrote a letter to the Virginia state attorney general asking for an investigation into the legality of practices by Mortgage Electronic Registration System, an electronic mortgage title database created by players in the mortgage industry.
Marshall is working diligently alongside other state legislators to change the state's foreclosure process. Virginia Sen. Chap Petersen hosted a press conference Monday at the Virginia General Assembly Building to discuss three bills he sponsored regarding the state's foreclosure process. According to an article in The Washington Post, he is trying to lengthen the foreclosure process so homeowners have more time to dispute claims.
Virginia is a non-judicial foreclosure state, meaning each case does not have to be approved by a judge. The judicial foreclosure process can take months longer than the non-judicial process.
According to analytics firm 1010data, New York's housing market is worse than California's for this very reason. As of November it took 19 months to liquidate a foreclosed home in California, compared with 32 months in New York.
Peterson introduced three bills into the Senate, which have yet to be discussed. Individually they would require a 30-day notice to foreclose on a defaulted property (including information identifying the owner and servicer of the loan and the outstanding principal balance); forbid the use of faulty affidavits in a foreclosure case, with criminal penalties; and require that creditors register each mortgage purchase with the Clerk of Circuit Court in the 17th Judicial District, which encompasses Virginia.
"This is arguably the most important remedy," Petersen said of the last requirement. "Right now, the mortgages are registered with "MERS," a privately-owned firm which operates solely for the benefit of lenders. There is zero government oversight of this entity, which holds the records of (literally) millions of Virginians."
MERS affirmed its legal track record when Marshall wrote the letter to the Virginia AG in November, stating the organization "does not eliminate, omit or otherwise fail to report land ownership information from public records."
Write to Christine Ricciardi.
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